Families and young people in western Sydney would be among the hardest hit by federal budget changes that deny the dole to under-30s for six months of each year, analysis shows.

The 17 per cent youth unemployment rate in the western suburbs is almost three times higher than in wealthier parts of the city, including the inner west, and is set to rise above 20 per cent, according to analysis of Australian Bureau of Statistics figures by the Brotherhood of St Laurence.

The analysis shows Parramatta is Sydney's centre of youth unemployment, at 16.8 per cent in January, which is close to three times the national unemployment rate of 5.9 per cent.

Tasmania has the highest rate of youth unemployment in the country at 17.4 per cent overall, but with rates as high as 21 per cent in the state's west and north-west.

The northern beaches, eastern suburbs and Sutherland have lower youth unemployment rates of 7.5 to 8 per cent. The inner west has the lowest rate of youth unemployment, at 6.6 per cent.

Tony Nicholson, the executive director of the Brotherhood of St Laurence, said youth unemployment in western Sydney was set to rise to one in four in two years. The increase in the proportion of jobless young people aged 16 to 24 would create ''a large underclass in western Sydney''.

From next year, those under 30 will not receive the dole for six months a year as a result of a federal budget decision.

''If it continued on the trajectory that we have seen in the last two years, youth unemployment in Parramatta in 2016 would be 26.4 per cent,'' he said.

''It would be a social disaster with large numbers of young people having little hope of securing a mainstream lifestyle.

''We know that when young people lose hope and a sense of direction it inevitably leads to increases in dependence on illicit drugs, higher levels of health problems and higher levels of crime.'' Mr Nicholson said modern employers placed a premium on education, qualifications and work experience.

''In these parts of western Sydney, you have a higher proportion of people who don't complete education and who don't get the vocational advice and the training they need to take up opportunities,'' he said.

University of Sydney Workplace Research Centre director John Buchanan said young people living in the eastern and northern suburbs were generally from wealthier middle-class families, with tertiary qualifications.

He said families in the western suburbs had been hit hardest by changes in the labour market, including the demise of manufacturing, retail and clerical jobs.

''The reality is there are more people looking for jobs than there are out there,'' he said.

NSW Labor MP for Marrickville Carmel Tebbutt said the federal government's decision to axe second-chance education programs such as Youth Connections would result in more young people dropping out of high school into long-term unemployment.

''This program helps young people who have struggled in a mainstream school continue their education … so they can get a job,'' Ms Tebbutt said.

Sophia Mazzitto, 17, from Erskineville, is among nine young people doing their HSC through the Youth Connection distance education program at Rosemount Good Shepherd Youth and Family Services in Marrickville.

As the eldest of six children, Sophia was consistently absent from school because she had to help care for her siblings.

''I want to do medical science at university,'' she said.

''I'm on top and doing well in my science studies. But now I feel like I'm back at square one.''